Austin City Councils hears from Austin Energy on new proposed 300 MW wind contract: 35% renewable energy by 2016

This morning, Austin Energy is slated to present to their bosses — Austin City Council — on a proposed contract that would secure an additional 300 MWs of wind energy from West Texas near Lubbock. The proposed contract would cost an estimated $31 million per year in energy purchases from Lincoln Renewable Energy over 18 years and more importantly if approved would meet Austin Energy’s renewable energy of 35% by 2020 four years early. The cost of the wind is priced in the $26 to $36 per MWh range, which is typically cheaper than the price of electricity generated by gas and almost on par with the cost from the dirty Fayette Coal plant. And this price is guaranteed over 18 years. And if it breaks, we don’t have to pay for it. So no operations and maintenance required by us ratepayers. 

 

Sierra Club is supportive of this and other contracts with renewable energy companies, and the word on the street is that Austin Energy will be taking another contract soon for a large solar energy plant or two in the coming months. Will all this activity, one does wonder however why Austin Energy has consistently said we don’t need to reassess our renewable energy goals? While one should certainly celebrate reaching a goal — I mean this beat’s California’s 33% goal set a number of years ago — why not take advantage of good financing and good projects to shoot for a higher goal — say 50% by 2020? While it is true that the vaunted production tax credit granted to wind developers ran out in 2013, any project — including this one — that began construction in 2013 still qualifies, and ERCOT’s interconnection records show us there are more than 5,000 MWs of wind projects being developed in 2014 and 2015 that likely would meet the PTC requirements. So let’s grab up these contracts while we can and wean ourselves off the need for coal, gas and buying off the market. Reaching out and securing  these contracts doesn’t mean we don’t need coal and gas today, but it does mean we can envision a future where we won’t need them as much.. if at all. So keep it coming Austin Energy! We can not only reach our goals, but set more ambitious ones!

 

Cyrus Reed, Conservation Director

AND MORE ON SOLAR GOALS in AUSTIN

OK — I just posted something yesterday about the ongoing discussion on the solar goals. Turns out there is more today.

Council members Riley, Morrison and Spelman have rewritten — with stakeholder input — a new resolution that would require that at least 50% of our total solar goal of 200 MWs by 2020 would be met by “local” solar, with half of that required to be on the consumer side of the meter. The resolution further states that the City Manager and Austin Energy must consider –and if found cost-effective adopt — the 400 MW solar goal recommended by the Local Solar Advisory Committee as part of the 2020 Generation Plan when it is scheduled to be revisited in 2014.

Sierra Club will be there today to support Item 53! See the council agenda for more details. Go Solar!

Ongoing Discussion in Austin on Solar Goals: Should we move to 400 MWs?

This week offered more discussions on Austin Energy’s solar goals. Back in 2010, City Council approved a 2020 Generation Plan and Climate Action Plan for Austin Energy that set a 200 MW solar goal — roughly 2.5% of total energy needs. The Generation Plan also said Austin Energy should consider adding to this goal to include a distributed solar goal.

In 2012, City Council approved a resolution to form a Local Solar Advisory Committee. LSAC was a multi-stakeholder group that met for the better part of a year and came out with a recommendation in 2013 of moving to a 400 MW solar goal, with half of the solar being installed within the Austin Energy service area (roughly Travis County). The report concluded that meeting these goals would only cost roughly $35 million between 2014 and 2020, and would actually save money by 2020, assuming that the new solar power was replacing the need to build and operate a new gas plant. Those savings would continue through 2030 since solar power has no fuel costs, and very limited operations and maintenance, whether owned by the utility or a third-party. That report, which can be found here, was roundly criticized by Austin Energy staff. In an August, 2013, Austin Energy  found that meeting a 200 MW goal could instead cost six times as much as the LSAC assumed, or roughly $230 million. That presentation can be found here.

The Austin Energy report itself led to lots of criticism due to many assumptions about continued high solar prices, low future energy prices and not taking into account issues like the amount Austin Energy spends on natural gas hedging. Austin Energy then hired KEMA, a consulting firm, which produced its own report (link here) looking at the LSAC report. That report was generally positive about the LSAC report founding that the overall goal, local goal and distributed goals recommended in the report were technically feasible, but they did differ with LSAC in the expected costs for utility-scaled. While LSAC expected utility-scale solar to save the utility money — because the energy would replace the need to build and run new gas plants — the KEMA report assumed the solar utility plants would cost money as they guestimated that future wholesale market prices would be slightly below the cost to finance and run a solar plant. Thus, KEMA found that reaching 400 MW would cost approximately $85 million between 2014 and 2020. Just for comparison sake, that is roughly what we spend each year to purchase coal from Wyoming to run our portion of the Fayette Coal Plant. And we would get this solar resource for 20 to 30 years!

KEMA presented their report twice this week, once to a joint committee meeting of the Electric Utility Commission and Resource Management Commission and to a subcommittee of the Austin City Council. Copies of the presentations can be found here.

Here is a table comparing the findings of the three studies on the 400 MW goal.

Table. A Comparison of Costs in Million Dollars Between KEMA, LSAC and Austin Energy to Achieve 400 MW Goals

Category	LSAC	KEMA	Austin Energy (Case A)
Total Cost in 2014	$7.61	$7.80	$21.89
Total Cost in 2020	($9.93)	$18.13	$38.02
Total Cumulative Costs, 2014 – 2020	$36.16	$84.96	$226
Rate Impact, 2014	0.30%	0.32%	Not listed
Rate Impact, 2020	-0.64%	1.12%	1.7%

Sierra Club also presented at both forums, arguing that City Council should adopt the LSAC recommendations and the various factors would make costs lower than those estimated by KEMA. These include recent changes to the market which will likely increase the market costs of energy, the likelihood that additional regulations on gas plants will make owning and operating gas plants more expensive and the fact that new financing tools should lower the cost of solar. The City Council present at the Committee meeting was amenable to revisiting the solar goals, but did listen to an argument from Austin Energy that these issues should be revisited as part of an update to the 2012 Generation Plan, expected in 2014. Sierra Club will continue to support a more robust solar plan and programs as one of the key ways to move Austin beyond coal and grow local businesses.

Some good news did also arrive that Austin Energy has put out an RFP for 50 MWs of solar, with the expectation that it would be built and operating within a few years. Stay tuned for more on solar — the emissions free, drought-free and fuel-free resource.

Austin Energy to respond to Local Solar Advisory Committee recommendations by October — Could double solar goal to 400 MWs

In November of 2012, the Austin Local Solar Advisory Committee (LSAC)  and its 20 members from industry, commercial and residential building owners, financial institutions and others, released its strategic plan and recommendations on increasing the use of solar power in Austin, the principal one of which was to raise the goal for solar power from 200 MWs of solar power by 2020, to 400 MWs of solar power by that date. Earlier this week, at the City Council Emerging Technology and Telecommunications Committee meeting, both Austin Energy, represented by Debbie Kimberly, Vice President of Distributed Energy Services, and several members of the LSAC, including vice-chair Colin Meehan, formerly with Environmental Defense Fund and now with Comverge, an energy management company, addressed the recommendations made by the Committee and came up with a date by which Austin Energy would respond officially: October.

During the meeting this week, Kimberly said Austin Energy has already moved forward at least partially on a number of the recommendations, including coming up with a five-year plan to gradually and predictably reduce residential and commercial incentives and project five-year solar goals as part of that process, introduce more solar-freindly financing options and create a path for community solar and for non-profits and smaller commercial entities to take advantage of incentives. Kimberly announced that Austin was increasing solar power through Austin Energy programs and incentives and that there were currently 58 MWs of solar installed in the Austin area, including the 30 MW Webberville plant, and 18 MWs of rooftop installations at residential, commercial and government buildings, or about 1/4 quarter of the current 200 MW goal. About 2.5 MW of rooftop solar was added in FY 2013 alone.

She also said that Austin Energy would be hiring a third-party to assess their current “Value-of-Solar” rate that was adopted as part of the recent rate case, and make recommendations for potential changes. There was concern expressed that Austin Energy might back off of its current rate, and not also consider the economic benefits and community benefits of solar as part of that review. In addition, she announced that they would continue to move forward on Community Solar options, meet with the Local Solar Advisory Committee and begin discussions of whether Austin Energy could consider adopting a larger solar goal, like the 400 MW goal recommended by the LSAC. She said the goal was to have a final report by October 1, 2013.

Meehan and other members thanked both Austin Energy and the Committee for supporting the Local Solar Advisory Committee, and expressed a concern that Austin Energy might backtrack on solar goals and the Value of Solar,and  instead  told council they should move aggressively forward. They suggested that as rebates were lowered that should not lower overall budgets, but instead spread the incentives and opportunities to more projects. In particular, many members suggested that much of the growth would occur in commercial applications, but getting the incentives and financing correctly managed would be key to increase the amount of solar installations in this sector. As an example, considering credits on bills rather than direct payments could lessen tax implications for some commercial buildings, as well as considering a Value of Solar payment for commercial applications. Others noted that waiting until October to respond to a set of recommendations since November of 2012 was a bit long, especially since the budgets — including solar incentive budgets — for 2014 will be set later this summer.

Council Committee members Morrison, Riley and Spelman indicated they were looking for Austin Energy to work with the LSAC and come up with programs that were cost-effective but kept Austin as a leader in solar power. Sierra Club, Lone Star Chapter and the Austin Beyond Coal team are supporting the 400 MW recommendation and will look forward to working with Austin Energy and City Council to reach this goal by 2020.

— Cyrus Reed, Lone Star Chapter, Sierra Club

Lake Travis Party a Hit!

Austin Beyond Coal
Photo by Craig Nazor

Austin Beyond Coal sure knows how to throw a party!

Last Saturday, November 17th, the Austin Beyond Coal campaign hosted a great lakeside party at the Iguana Grill to kick off efforts in the lakes region to phase out the Fayette coal-fired power plant.

The Fayette Power Project is a 1,600 MW coal plant plant located in Fayette County, Texas that uses more than 5 billion gallons of water from our river and lakes every single year.  In a time of extreme drought, this is water that could be put to better use supporting our communities and farms, or simply being conserved.   As you’ll see in the pictures below, the fact that we are still in one of the worst droughts this state has every seen was very obvious while out on Lake Travis last weekend.

Lake Travis
Photo by Craig Nazor

Attendees heard from Austin Beyond Coal volunteers as well as Dr. Lauren Ross, an engineer who knows quite a bit about the relationship between water, coal and the LCRA; all of this while enjoying great food, great music from the Bouldin Creek Bobkat Band and a beautiful Texas sunset.

Bouldin Creek Bobkat Band
Photo by Craig Nazor

Missed out? No problem! For information on how to get involved in efforts to phase out of the Fayette coal plant and free up 5 billion gallons of water a year, email lydia.avila@sierraclub.org.

– Lydia Avila, Associate Field Representative for Beyond Coal